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Asian sovereign bonds gain after downbeat US session

Friday 03.40 BST

What you need to know

  • Sovereign bonds benefit from risk-off sentiment
  • Australian banks lower on regulatory action
  • Crude stabilises after drop overnight

Overview

Asia-Pacific market movements were muted on Friday as investors took their cues from a “risk off” mood on Wall Street overnight, favouring sovereign bonds in the region ahead of US non-farm payrolls data out later today.

Hot topic

Major Asia-Pacific government bonds were gaining across the board, with yield on the Australian 10-year sovereign note down 4 basis points at 2.617 per cent, the lowest level in more than a month. Yields move inversely to price.

Yield on the 10-year Japanese government bond was down 1bp at 0.054 per cent, while that for the equivalent New Zealand note was 7bp lower at 2.87 per cent.

The 10-year US Treasury yield was flat at 2.2212 per cent, however, having already dropped 5bp during Thursday’s session to a one-month low.

Forex

The Australian dollar swung to a slight gain after dipping briefly on news that the Reserve Bank of Australia had lowered its 2017 forecast for gross domestic product by half a percentage point due to the currency’s strengthening streak. The RBA made the statement in its quarterly review on monetary policy. The Aussie dollar was up 0.1 per cent on its US counterpart at $0.7956.

Movements in the region were mostly minor, with Japan’s yen weakening slightly to ¥110.07 per dollar after new data showed monthly wages had dipped in July.

Equities

Asia-Pacific equities were mixed on Friday but relatively unmoved after a downbeat Thursday session in the US in which the S&P 500 closed down 0.22 per cent.

The S&P/ASX 200 climbed back from an initial dip for a flat performance. This followed the release of the RBA’s quarterly statement on monetary policy. The financial segment was down 0.7 per cent after the country’s financial crime agency on Thursday said it was suing Commonwealth Bank of Australia for failing to report suspicious transactions involving more than 50,000 alleged breaches of money laundering laws. Shares in the bank were down as much as 3 per cent.

Tokyo’s Topix index was off 0.2 per cent as the utilities segment dropped 0.9 per cent, offsetting gains of 0.3 per cent in consumer discretionary stocks. Shares in Mazda Motor were up as much as 5.8 per cent on word it was expected to decide later in the day on a possible collaboration with Toyota Motor.

In Hong Kong the Hang Seng index was up 0.1 per cent, while in China the Shanghai Composite was up 0.3 per cent and the Shenzhen Composite was down 0.1 per cent.

Commodities

Crude oil was stabilising in Asia trading after a choppy session overnight left prices lower. Brent crude, the global benchmark, was hovering just below the $52 a barrel mark, down 0.1 per cent at $51.98. West Texas Intermediate, the US marker, was down the same amount and just below the $49 mark at $48.99.

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